Understanding market efficiency is an important part of investment decision-making. It can help investors to identify the most appropriate investment strategies and develop realistic expectations for their returns. In this episode of the Rational Reminder Podcast, we sit down with Professor Burton Malkiel, the renowned economist, and author of the classic investing book A Random Walk Down Wall Street. Professor Malkiel is a distinguished figure in the world of economics and academia. He holds the prestigious title of Chemical Bank Chairman's Professor of Economics Emeritus and Senior Economist at Princeton, where he has made significant contributions to the field over the years. In our conversation, we discuss Professor Malkiel’s views on the stock market, the efficient market hypothesis, how behavioural finance relates to investing, and why index funds should be at the core of every portfolio. Throughout the episode, Professor Malkiel shares his insights on a wide range of topics related to personal finance and investing, including the benefits of index funds, the dangers of active stock picking, the impact of fees and taxes on investment returns, factor investing, and expensive asset classes. He also discusses research on socially responsible investing and how investors can incorporate ethical considerations into their portfolios without sacrificing performance. In this episode, listeners will gain a better understanding of the vital principles of investing and how to apply them to achieve their financial goals. Whether you're a novice investor or an experienced pro, this episode offers valuable insights and advice from one of the most respected economists in the field, Professor Malkiel.
Timestamps:
0:00 Intro
4:14 Burton describes what the term “efficient markets” means
10:46 Burton explains the logical arguments for investing in index funds rather than actively managed strategies
14:27 How Burton's advice was received when the book was first published 50 years ago
23:20 How Burton's investment advice has changed over the last 50 years
28:35 Articulating the difference between investing and spending
34:53 Burton's advice for people compelled to participate in speculation
36:50 How the existence, and persistence through history, of bubbles fits with markets being efficient
45:47 Burton's thoughts on momentum and trend following as investment strategies
50:58 Burton's thoughts on risk parity strategies, such as Bridgewater’s All Weather Fund
1:03:08 The impact the recent era of ultra-low bond yields had on the role of bonds in a portfolio
1:07:30 The importance of saving in terms of investor outcomes
1:14:50 How investors should decide how much risk they should take with their investments
1:19:06 Burton's opinon on whether individuals should rent or own their homes
1:32:07 50 years and many editions later, what Burt sees as the best part about writing such an impactful book
1:33:28 Burton defines success in his life
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Book From Today’s Episode:
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing - amzn.to/3Bit3ag
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26 июн 2024
